Banks, Americans for Financial Reform, and Financial Overhaul

It’s been a big week. Tuesday saw the launch of Americans for Financial Reform (AFR), a coalition of more than 200 organizations (including AFFIL) working to make sure ordinary citizens have a voice in fixing our nation’s financial structure. And Wednesday saw the announcement of the Administration’s plans to overhaul that structure.

AFFIL is concerned with consumer protection rather than the whole of the Administration’s ideas, and loudly applauds their proposal to create a Consumer Financial Protection Agency (CFPA). Meanwhile, AFR issued this statement addressing the plans more broadly. In response to the idea of strengthening the power of the Federal Reserve, AFR insists that “Congress must add strong measures to ensure the Federal Reserve is truly independent and responsive to the public.” Amen to that.

Pretty much everyone seems to like the idea of creating an CFPA – including folks who are worried that the Administration’s plans don’t go far enough to fix our radically broken financial system (i.e., Arianna Huffington, Katrina vanden Heuvel).

Except, of course, the banks. Over at US PIRG, Ed Mierzwinski explains that their opposition to the CFPA has been “weak and desperate.” But even so, AFR spells out this disconcerting political reality:

Given the dramatic collapses on Wall Street it would seem at first blush that getting a real financial reform package through Congress would be easy.

Think again. Despite the massive bank failures of the last year, the debilitating bailouts and the obviously exposed flaws in the system, the financial industry will fight as hard as ever to keep the status quo. After all, today’s financial regulatory system is their handiwork. For decades, banks have lobbied for and won the ability to write their own rules and they are still at it.

As Senator Richard Durbin of Illinois said so bluntly, after bank lobbyists helped defeat his recent bill to help homeowners facing foreclosure: “The banks are the most powerful lobby on Capitol Hill…and frankly they own the place.”